Posts filed under “Data Analysis”

Flatlining GDP & NFP

As much as I typically like to discuss NFP on the first Friday of each month, I find myself unable to muster the usual blather. Not because the initial data is near garbage, subject to massive revision, and wildly off from reality — that’s a given.

No, today I find myself unable to get enthused about NFP because I am still reeling from the horrific GDP data we got yesterday.

Gdp_wsj_20070531
Yesterday we learned that in Q1 2007, the economy expanded at the near zero growth pace of 0.15%. That’s practically flatlined. This was the worst reading since a 0.2% increase in Q4 of 2002.

What’s that, you ask? In the media, GDP was reported at 0.6% you say? Um, no — that’s the annualized rate — take Q1 GDP and go mulitple it 4X and THAT’s how you get to a still pitiful 0.6%.

The sunshine crowd bamboozled the press on this big time. Articles such as this one: U.S. Economy: First Quarter May Have Been Low Point — report conjecture as fact and completely ignore what the actual data is. The WSJ was no better:  Slow Growth May Presage Pickup.

Or not. 

Here are the facts: The U.S. economy grew last quarter at
the slowest pace in more than four years. The initial GDP report of 1.3% was actually more than double twhat the updated data showed, and was 25% below economists consensus. Housing, slack capex investment, declining consumer activity all are responsible for part of the slowdown.

Meanwhile in Europe, Business Investment has picked up dramatically. Europe’s economy is growing about 4X the rate of the US in Q1.

Also included in the Commerce Department Data was that consumer spending was revised upward, to 4.4% from 3.8%. Note that if not for this revision, we would be talking about a sub 0% GDP. That would be the first quarter of 2 needed for the official measure of a recession.

How is it possible that consumer spending rose, when 80% of retailers have been missing numbers? Easy: Rising prices (not sales) in food and energy. You know, those elements the Fed hates to measure when it comes to inflation.

How and why most economists think that this is the low point is simply beyond me.

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Sources:
U.S. Economy: First Quarter May Have Been Low Point

Shobhana Chandra
Bloomberg, May 31, 2007
http://www.bloomberg.com/apps/news?pid=20601068&sid=amY1npUWWskA&

Europe’s Economy Grows 0.6%, Led by Investment Surge
Fergal O’Brien
Bloomberg, June 1 2007
http://www.bloomberg.com/apps/news?pid=20601068&sid=aVGPpxHmSbpk&

Slow Growth May Presage Pickup
Thinned-Out Inventories Mean More Output Ahead; Consumers Propel Economy
SUDEEP REDDY
WSJ, June 1, 2007; Page A2
http://online.wsj.com/article/SB118061455598919992.html

Category: Data Analysis, Economy, Employment

Housing Freefall Continues Unabated

Category: Data Analysis, Economy, Real Estate

Real & Private Fixed Investment

Category: Data Analysis, Economy, Federal Reserve

Business Employment Dynamics & NFP

Category: Data Analysis, Economy, Employment, Psychology

Another Look at New Home Sales

Category: Data Analysis, Economy, Psychology, Real Estate

New Home Sales Up (but beware double digit monthly gains)

Category: Data Analysis, Economy, Real Estate

WSJ: Overstated Job Market Strength?

Category: Data Analysis, Economy, Employment

OER / CPI and New York Rentals

Category: Data Analysis, Economy, Federal Reserve, Fixed Income/Interest Rates, Inflation, Real Estate

OER, CPI and the Fed: A Strange Love Story

Category: Data Analysis, Economy, Federal Reserve, Fixed Income/Interest Rates, Inflation, Psychology

The Value of the Dollar

Category: Currency, Data Analysis, Economy, Inflation